Time Warner Cable, Fox at impasse; blackout looms

Yinka Adegoke

4 Min Read

NEW YORK (Reuters) - About 13 million Time Warner Cable Inc subscribers were to lose most Fox programing at midnight on Thursday unless the cable service provider reached a last-minute deal to pay fees to News Corp to broadcast the shows.

Talks heated up as the deadline approached but the two sides were deadlocked on some key points, according to a person familiar with the negotiations who spoke on condition of anonymity.

News Corp, which owns Fox, wants Time Warner Cable to pay $1 per subscriber per month for the right to carry Fox Networks’ free-to-air broadcast shows such as “American Idol,” “The Simpsons” and “House,” as well as sports programing like NFL and college football games.

Subscribers could lose Fox programing in cities like New York, Los Angeles, Dallas and Orlando.

Fox’s dispute with Time Warner Cable is also about higher affiliate fees for several entertainment and sports cable networks including FX, Speed, Fuel and Fox Soccer Channel. The discussions do not include Fox News and Fox Business.

“I have urged Fox and Time Warner Cable to agree to a temporary extension of carriage if they do not come to terms on a new carriage agreement today, in order to prevent disruption to their viewers.”

Time Warner Cable on Thursday said it had urged Fox to agree to a 30-day cooling-off period proposed by New York congressman Steve Israel so Fox shows could remain on the cable operator’s network at least till January’s end.

The cable company said it agreed with both the FCC chair and the congressman. Fox was not immediately available with a response.

Time Warner Cable has balked at the so-called retransmission fee. Its executives privately point to deals with smaller affiliate TV broadcasters at about 20-25 cents a subscriber.

Time Warner Cable is wary of setting a precedent. Besides Fox, the other three major U.S. broadcast networks -- CBS Corp’s CBS, Walt Disney Co’s ABC and General Electric Co’s NBC -- will all be pushing to be paid cash per subscriber as their advertising-reliant business suffers.

CBS, the No. 1 U.S. broadcast network, has talked about getting paid about 50 cents a subscriber.

The prospect of sports fans losing access to college football games during the Bowl Championship Series also prompted U.S. Sen. John Kerry to intervene last week with a suggestion of arbitration by U.S. regulators.

But News Corp turned down the proposal on Wednesday, saying a deal needs to be hammered out at a bargaining table and not in the hands of a third party.

News Corp Chief Operating Officer Chase Carey told staff on Wednesday afternoon that it looked likely that Fox’s channels would go off the air on Time Warner Cable systems.

Broadcast TV networks have struggled with falling ratings as viewers spend more time watching cable networks, or catching shows on the Internet at sites like Hulu.com. Broadcasters also say they are grappling with rising programing costs, particularly with sports.

The broadcasters now want to rework their business model to be more like that of cable networks, which earn revenue from both advertising and affiliate fees paid by cable and satellite service providers.

Fox Networks Chief Executive Tony Vinciquerra told Reuters on Tuesday that $1 a subscriber would be a “reasonable step” in the right direction and predicted other broadcasters might follow suit.

Time Warner Cable, which split off from parent Time Warner Inc earlier this year, is also negotiating on behalf of Bright House Networks. (Reporting by Yinka Adegoke, editing by Tiffany Wu and Matthew Lewis, Gary Hill)